Banco Santander delivers €3.4bn profit in Q1 2025, reaffirms annual targets amid strong capital, fee income and efficiency gains

Banco Santander started 2025 with strong momentum, reporting a 19% year-on-year jump in attributable net profit to €3.4 billion in the first quarter. The group cited strong fee income, disciplined cost management, and improved operating leverage as the primary drivers of this performance. Earnings per share rose 26% to €0.21, while return on tangible equity (RoTE) climbed to 15.8% post-AT1, highlighting consistent capital returns to shareholders amid an evolving macroeconomic landscape.

The first-quarter results place Santander firmly on track to meet its full-year 2025 financial targets, including approximately €62 billion in revenue, mid-to-high single-digit growth in net fee income, a RoTE of 16.5%, and a CET1 ratio of 13%. The bank also reaffirmed its intent to return up to €10 billion to shareholders across 2025 and 2026 via dividends and buybacks, subject to regulatory approvals and capital thresholds.

What Fuelled Banco Santander’s Profit Surge in Q1 2025?

Total income grew 1% year-on-year to €15.54 billion, or 5% in constant euros, driven by record net fee income of €3.37 billion and higher customer activity. The bank added nine million new customers, expanding its global base to 175 million, while simultaneously streamlining operations through its “ONE Transformation” programme. These initiatives reduced operating expenses by 1%, contributing to an improved efficiency ratio of 41.8%.

The programme has replaced legacy systems with shared, cloud-native technologies such as the Gravity platform, enabling cumulative cost savings of €500 million since December 2022. This digital consolidation supports the bank’s long-term aim to increase operational resilience and responsiveness to external economic shifts.

How Has Santander Maintained Asset Quality and Capital Strength?

Credit quality remained robust, with loan-loss provisions stable at €3.16 billion. The cost of risk improved to 1.14%, down six basis points compared to the prior year, and the non-performing loan (NPL) ratio dipped below the 3% mark for the first time in over 15 years, reaching 2.99%. Loans rose 1% in constant euros to €1.02 trillion, led by growth in Consumer, CIB, Wealth, and Payments segments. Deposits rose by 3%, bolstered by customer additions and a strong digital push.

Santander’s Common Equity Tier 1 (CET1) capital ratio rose to 12.9%, gaining 10 basis points quarter-on-quarter and 60 basis points over the past year. The current ratio places the bank at the top end of its targeted operating range of 12–13%, reflecting strong internal capital generation and strategic capital optimisation.

What Dividends and Buybacks Has the Bank Announced?

Santander confirmed a final cash dividend of €0.11 per share payable on 2 May 2025, bringing the total dividend payout for 2024 earnings to €0.21 per share—a 19% increase year-on-year. This is complemented by €3.1 billion in ongoing share buybacks initiated from 2024 earnings. Combined, these returns represent approximately €6.3 billion in total capital distributed to shareholders for the 2024 cycle.

Since 2021, Santander has repurchased 14% of its outstanding shares, reflecting its consistent capital return philosophy. Future returns of up to €10 billion from 2025–2026 earnings are contingent on regulatory and board approvals, but signal the bank’s confidence in its financial position and cash generation potential.

Which Divisions Powered Santander’s Earnings Momentum?

Retail & Commercial Banking posted a 28% rise in attributable profit to €1.9 billion, supported by solid revenue growth, cost control, and a 1.3-point improvement in the efficiency ratio. Deposits rose by 2%, while loans dipped slightly due to amortisations and the bank’s emphasis on profitability over volume.

Digital Consumer Bank grew its profit by 6% to €492 million, with a 12% increase in deposits and 4% loan growth. The business launched Openbank in Mexico and expanded its US deposit base to over $3.5 billion through a partnership with Verizon. Cost of risk remained stable at 2.14%.

Corporate & Investment Banking (CIB) delivered a record €806 million in profit, rising 18% year-on-year, with total revenue reaching €2.22 billion. Fee income surged across Global Markets and Corporate Finance, especially in the US. With a RoTE of 21.6%, this capital-light unit remains one of the most profitable within the group.

Wealth Management & Insurance reported €471 million in profit, growing 28% as assets under management (AuMs) rose to €511 billion. Both Private Banking and Santander Asset Management delivered strong commercial performances, driven by positive market dynamics and new client acquisition.

The Payments segment, including PagoNxt, contributed €126 million in profit—up 30%. Monthly transaction volumes increased by 10% to 3.5 billion, and EBITDA margins improved 11.6 percentage points to 28.6%. Total merchant payment volume through Getnet rose 14% to €56 billion, while cards spending jumped 7% to €81 billion globally.

How Are Investors Responding to Santander’s Performance?

Despite the strong fundamentals, Banco Santander’s share price dropped 2.7% on the day of earnings release, closing at €6.18 on 30 April 2025. The dip likely reflected short-term profit-taking amid high year-to-date gains. Nonetheless, the stock remains up approximately 38.5% in 2025 so far, outperforming several European banking peers.

Institutional sentiment remains constructive. Analysts maintain a consensus “Outperform” rating, with a 12-month average target price of €6.73, indicating nearly 9% upside from current levels. This outlook is based on the bank’s healthy RoTE trajectory, CET1 strength, and low-risk profile in a higher-for-longer interest rate environment.

The stock has seen steady accumulation by institutional investors, particularly those favouring capital return strategies. Santander’s inclusion in major indices and its liquidity profile further strengthen its appeal to fund managers, especially in Europe-focused bank ETFs.

FII activity in Q1 2025 reflected cautious optimism. Foreign institutional investors maintained exposure, attracted by the bank’s growing earnings yield and cost discipline. Domestic investors, including Spanish pension and insurance funds, have also shown stable holdings, highlighting local confidence in the bank’s risk-adjusted returns.

What’s Next for Santander in 2025?

The bank remains confident in its trajectory and has reiterated all previously stated full-year targets. These include revenue of approximately €62 billion, a RoTE of around 16.5% post-AT1, a CET1 capital ratio at the top of its 12–13% range, cost savings in absolute terms, and a cost of risk maintained at approximately 1.15%.

Santander’s executive chair Ana Botín noted that while global uncertainties persist, the bank’s diversification, transformation strategy, and customer-centric model are helping it stay agile and competitive. By leveraging shared platforms and simplifying product lines, Santander aims to deliver more with less—positioning itself as a scalable, digitally efficient global bank.

With €93.9 billion in market capitalisation, over 207,000 employees, and 3.4 million shareholders, Banco Santander remains one of Europe’s most systemically important financial institutions. As it pursues digital acceleration and operational leverage, the bank is emerging as a resilient and attractive investment for long-term-focused equity holders.